Google have release the latest version of their phone operating system, Android 2.3.4 for the Nexus S. Among the improvements include upgrading the GTalk app to enable video chat to other Android users and GTalk PC or Mac users, over wifi and 3G.
The 2.3.4 update on the Nexus One doesn’t include the improved GTalk app, but the Oxygen ROM by AdamG is available for the HTC Desire over on the XDA with the updated app. I have it installed and can confirm that it works. (Although you have to remember that the Desire does not have a front facing camera!)
I have tested the new version of GTalk and can confirm that it does indeed work. You can have a two way video chat and if you need to, just have an audio only call. To get started go into the app and select your profile. From there tick the box that says “Allow video and voice chats” and you’re good to go.
Read more about this release on the Google Mobile Blog.